UNITED STATES SUPREME COURT RECOGNIZES CAT’S PAW THEORY OF LIABILITY IN EMPLOYMENT CASES: Does One Paw Know What the Other is Doing?
By Charla Bizios Stevens and Jennifer L. Parent
Published in the Business NH Magazine and the New Hampshire Bar News
On March 1, 2011 the United States Supreme Court issued a decision on the “cat’s paw” theory of liability. The “cat’s paw” seeks to hold employers liable for discrimination by employees who played no part in the ultimate employment decision but influenced the decision in some way. It is loosely based on one of Aesop’s Fables, The Monkey and the Cat, in which the monkey dupes the unwitting cat into pulling chestnuts from burning embers. The cat burns its paw while the monkey gobbles the chestnuts, sharing none with the cat.
The case of Staub v. Proctor Hospital represents a significant victory for employees and is also remarkable for the fact that it was a unanimous decision by a Court which has until recently been sharply divided on employment issues. This decision should serve as a warning to employers to take a hard look at how they make discipline and termination decisions.
Staub was employed as an angiography technician by Proctor Hospital. During his employment he was a member of the United States Army Reserve. Both his immediate supervisor and her supervisor were openly hostile to Staub’s military obligations. As a member of the reserves Staub was required to attend military training one weekend per month and two weeks during each summer. There was evidence which the jury accepted that Staub’s supervisor showed animosity toward these obligations and that the department head also made derogatory remarks about them.
There was also evidence that Staub was counseled for such issues as poor attitude, lack of professionalism, and lack of ability to work with others. His supervisor gave him disciplinary warnings which included a directive requiring him to report to her or her supervisor when his cases were completed and to get permission if he wanted to leave his work area. After receiving a report from the supervisors that Staub had violated the Corrective Action, Proctor’s vice president of human resources reviewed the materials placed in Staub’s personnel file by his supervisor and decided to fire him. Staub claimed that he had not violated the directive and had left a voice message with his supervisor letting her know that he was going to lunch. The VP of Human Resources never followed up to determine what really happened. Staub filed a grievance, claiming that his supervisor had fabricated the allegation because of hostility toward his military obligations, but the VP of Human Resources would not change her mind about the termination.
Staub sued Proctor under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which prohibits discrimination based on a person’s “membership” in or “obligation to perform service in a uniformed service,” 38 U. S. C. §4311(a), and provides that liability is established “if the person’s membership . . . is a motivating factor in the employer’s action,” §4311(c).
The crux of this case, however, is that Staub did not allege that the VP who fired him was motivated by hostility to his military obligations. Rather, he argued that his supervisors were and that they, like the monkey, used the VP of HR, like the cat, to bring about his termination. A jury found Proctor liable and awarded Staub damages, but the Seventh Circuit reversed, holding that Proctor was entitled to judgment as a matter of law (known as summary judgment) because the decision maker had relied on more than the supervisor’s advice in making her decision.
The Supreme Court disagreed with the Circuit Court. It determined that there was evidence presented to the jury that the supervisors’ actions were motivated by hostility toward Staub’s military obligations and that the information from the supervisors contributed to the termination decision made by the VP of HR. Finally, there was evidence that both supervisors specifically intended to cause Staub’s termination.
The Court concluded that if a supervisor performs an act motivated by discrimination that is intended by the supervisor to cause an adverse employment action, and if the act is the proximate cause of the adverse employment action, then the employer is liable. Also of significance is that fact that the Court did not necessarily excuse employers who undertake their own investigations of the circumstances leading to the action. The Court excuses an employer’s reliance on a biased report only if the investigation shows that the adverse employment action was entirely justified even without the supervisor’s recommendation.
Although this decision is specific to USERRA, given the similar standards of proof required under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act, employers are likely to be held to the same standards in those cases.
The message to employers is that they will need to evaluate carefully the practices they employ in making termination decisions and conducting investigations. Employers must be careful to look at the process leading up to each termination including who provided input into the decision and what their motivation might be. It is critical that decision makers avoid “rubber-stamping” decisions rather than conducting independent investigations into the underlying facts and motivation. This is especially important in companies with off-site human resource departments where decision makers may be completely unfamiliar with not only the individual employees but also the supervisors evaluating them.
This decision will likely result in an increase in litigation and trials as fewer cases will be decided early on by summary judgment. These cases are expected to focus on the scope and conduct of investigations. Employers should direct their efforts on making certain that mid-level managers are adequately trained in management techniques, documenting performance and preventing discrimination, and that decision makers are armed with the skills to conduct independent and unbiased investigations into workplace disputes.
Jennifer L. Parent and Charla B. Stevens are directors in the Litigation Department and Employment Law Practice Group of McLane, Graf, Raulerson & Middleton, P.A. Jennifer serves as chair of the Employment Law Practice Group and can be reached at 628-1360 or [email protected]